EAPA Respondent Says EAPA Investigation Notice Is Due Process Right

CBP violated Phoenix Metal Co.'s due process rights by not giving it notice and a chance to comment on interim measures imposed in an Enforce and Protect Act case on the company's cast iron soil pipe imports, the company said March 15 (Phoenix Metal Co. v. United States, CIT # 23-00048).

Phoenix filed its brief at the Court of International Trade after CIT denied the U.S. request for a voluntary remand to reconsider certain due process issues in light of the U.S. Court of Appeals for the Federal Circuit's decision in Royal Brush Manufacturing v. U.S. (see 2401230072). The company said it has a right to notice and chance to be heard "at a meaningful time and in a meaningful manner." It also said various appellate courts and the Supreme Court have "unequivocally" found that due process requirements come into play before agency action when temporary penalties are imposed on a party.

Phoenix said it isn't claiming it had a right to a court hearing or formal agency hearing, but that it had a due process right to receive notice that the investigation started and a chance to "express its opposition" to the evasion allegation before the interim measures were imposed."Timely notification of the EAPA proceeding also serves the public interest in preventing evasion by immediately deterring further imports of the implicated merchandise or, possibly, terminating the proceeding if CBP error is apparent," Phoenix said.

The company took aim at defenses from the U.S. and the EAPA petitioner, which said that since the EAPA statute is silent on providing notice, CBP can deny respondents notice and the chance to be heard on interim measures. Phoenix said this claim conflicts with Royal Brush, in which the appellate court said the "right to due process does not depend on whether statutes and regulations provide what is required by the constitution" (see 2307270038).

The petitioner, the Cast Iron Soil Pipe Institute, added that imposing interim measures is a "mere procedural act," not requiring due process compliance steps. In response, Phoenix cited a U.S. Court of Appeals for the D.C. Circuit ruling that said that "a mere procedural rule intended to regulate an agency’s internal housekeeping must be distinguished from a substantive regulation that goes beyond the technical organization of procedures, regardless of an agency’s own characterization of the regulation as 'procedural.'"

Phoenix said imposing interim measures is "unequivocally a substantive and enforcement regulation that affected Plaintiff’s right and interest in defending against the allegation of evasion in a timely manner and potentially preventing the imposition of such measures altogether."

The company also argued that it has a "protected interest." While the U.S. said a company has no protected interest in a certain duty rate, "importation of merchandise, or engaging in international trade," Phoenix said it doesn't claim its interest is in any of these things. Instead, the company said it has a right to notice of the evasion allegation and a chance to be heard "at a meaningful time before CBP imposed punitive measures."

The company added that CBP's reliance on prior EAPA decisions was "arbitrary and capricious" and that the agency's rejection of the company's "rebuttal of new factual information was arbitrary."